Increasing Transparency of Financial Data for Decision Making

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Increasing Transparency of Financial Data for
Decision Making

• Presented June 27, 2007
• Board of Regents
• Budget and Finance Committee Meeting

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• Current Financial Data Indicators
• Possible Cost Comparisons
• Performance Indicators

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Peer Institutions

• Enrollment data
• Graduation rates
• Degrees awarded
• Average revenue per student
• State appropriation
• Tuition revenue
• Expenditures per student by core function
• Average salaries by academic rank

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National Surveys

• Compensation surveys
• Endowments
• Library collections
• Research and Development expenditures
• Instructional Costs per student credit hour by
  discipline
• Credit hours produced by tenure/tenure track
  faculty by discipline

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CU Specific Data

• Sources and Use of Funds by College
• Classroom Utilization

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NACUBO Cost of College Project

• goal of the project was to successfully build
  and test a cost methodology that was applicable
  to all colleges and universities, and that was
  simple, uniform, and broadly acceptable to the
  higher education
• community

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Guiding Principles

• 1) Rely on basic averaging techniques
• The committee did not try to distinguish between
  freshmen and seniors, between classics majors and
  engineering students
• 2) Concentrate on the cost of undergraduate
  education
• The project decided to exclude all expenses
  related to separate graduate and professional
  schools, research institutes, continuing
  education and other important activities
• 3) Use existing accepted allocation methods
  wherever possible
• Research universities were asked to use the same
  methodology (OMB Circular A-21) in allocating
  costs to undergraduate education and related
  activities
• 4) Keep it simple
• the committee opted for the simplest approach,
  even if doing so sacrificed some accuracy at the
  margins

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Methodology

• The methodology provides a mechanism that any
  college or university can employ to present its
  own cost and price data in a standard format.
• The methodology allows individual institutions
  to track cost across consistent categories, and
  then compare costs with those at other
  institutions having similar missions and
  structures.

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AGB Benchmarking Service

• The data and formats featured in these reports
  are appropriate for board use. They highlight
  the big picture financial and operational
  indicators boards want in order to fulfill their
  fiduciary and governance responsibilities.

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Performance Indicators

• The indicator is mainly an interface, a display
  vehicle for key metrics. Figuring out what
  metrics to include now thats tough.
• It is intended to give you a quick snapshot of
  the current statusincluding recent positive or
  negative trends.

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continued

• They are most useful when they present leading or
  current indicators, not lagging indicators.
• Current indicators often measure performance by
  comparing actual results to plan data. If the
  key metrics become standard and consistent, then
  it will be easier to benchmark your performance.

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Example
Volume IndicatorsMonth of April 2007
Greater than 2.5 Unfavorable
Greater than 2.5 Favorable
Neutral
Page 3
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Performance IndicatorsTreasurers Office - Three
Master Indicators

• Master indicator 1 CASH MANAGEMENT
• Sub-indicators
• 1) Cash flow is adequate to meet institutional
  needs for the next 6
• months
• 2) Banking services are meeting users needs
• 3) Fraud and other risks are being properly
  addressed
• Master indicator 2 INVESTMENT MANAGEMENT
• Sub-indicators
• 1) Investments conform to relevant policies
• 2) The asset allocation within each portfolio
  supports the investment
• policy
• 3) The Treasury Pool is performing at or above
  its benchmark
• 4) The earnings distribution budget is on target
  for the fiscal year

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Treasurers Office -Three Master
Indicators continued

• Master indicator 3 DEBT MANAGEMENT
• Sub-indicators
• 1) The amounts of external and internal debt are
  within policy limits
• 2) All covenants agreed to when the debt was
  issued are being met
• 3) The institutions credit rating is stable